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HMRC internal manual

PAYE Manual

From
HM Revenue & Customs
Updated
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Employer returns: employer EOY penalties: EOY penalty cycle

This subject is presented as follows

 

Background

Employers and contractors are required to send in their returns by the due date.

There are a number of exceptions to the issuing of an EOY penalty, see ‘Exceptions to EOY penalties’ at PAYE51025.

ECS penalty issue cycle

ECS uses 5 penalty types to control the cycle of reminders and the issue of penalty determinations.

These are detailed in the table below

Type Description
   
1 Final Penalty 
Issued after the receipt of a late employer / contractor return which has been received before the interim penalty issue (20 September each year)    
  2 Interim Penalty 
Issued when the employer / contractor return has not been received 4 months after the due date    
  3 Interim Penalty 
Issued when the employer / contractor return has still not been received after a further 4 months    
  4 Final Penalty 
Issued after the receipt of a late employer / contractor return which has been received after the interim penalty issue (20 September)    
  5 Duty Geared Penalties (PAYE51050)
Imposed under S98A (2)(b) TMA 1970. Issued after the Processing Office has followed the appropriate procedure, where the employer / contractor return remains outstanding more than 12 months after the due date. Determined without prejudice to any interim penalties already issued. Issued subject to authorisation from Tax Administration Advise (TAA)

Interim penalties

Interim penalties are the penalties charged under Section 98A (2)(a) TMA70 where the return remains outstanding after the due date.

The penalty types associated with interim penalties and the inclusive dates covered are detailed in the following table

Outstanding from To Penalty type
     
20 May 19 September 2
20 September 19 January 3
20 January 19 May 3

The printing and issue of each set of penalty notices will take place over a weekend, following the end of the penalty period covered.

Note: In the case of new employers, if the return remains outstanding after the due date then an interim penalty will be issued based on there being the minimum number of employees associated with that employer.

However, an interim penalty will not be issued for a new employer if

  • It is excluded due to the return type

Or

  • An Inhibition signal is held on ECS for that employer

Final penalties

Final penalties are the penalties charged under S98A (2)(a) TMA70 when the return is received. The penalty types assigned to final penalties, and the inclusive dates covered are detailed in the following table

Return received between To Penalty Type
     
20 May 19 September 1
20 September 19 May 4

If the employer / contractor return is received between 20 September and 19 May, interim penalties are likely to have been automatically charged. If the total interim penalties are greater than the statutory amount due, no final penalty will be issued. The existing interim penalties issued may be automatically reduced or discharged by ECS as appropriate.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)  

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)  

Duty geared penalties

If the employer return is still outstanding after twelve months then in addition to fixed penalties, a duty geared penalty may also be considered in suitable cases. Duty geared penalties can only be issued on authorisation by Tax Administration Advise (TAA) who will on receipt of the papers

  • Consider whether based on the facts of that case a duty geared penalty is appropriate

And

  • Determine the amount of any duty geared penalty due (PAYE51050)